Retirees sue to save pension

Verizon is trying to transfer ex-managers' plan to an insurance company

Updated 9:11 pm, Monday, December 3, 2012

Emergency workers were dispatched to a Verizon bill collecting site in Mendands N.Y., Monday morning, Oct. 22, 2012, after a suspicious substance was discovered in a phone bill envelope. The building was evacuated while officials assessed the situation. No charges have been filed. (Will Waldron / Times Union)

Emergency workers were dispatched to a Verizon bill collecting site...

ALBANY — Former management employees at Verizon Communications are trying to stop the company from unloading their $7.5 billion pension plan to a large insurance company.

Under the deal, Verizon would have the pension plan buy a group annuity contract from Prudential Insurance. Prudential would then be responsible for making payments to the 41,000 Verizon retirees currently covered by the plan.

The transaction would free Verizon of a large chunk of the $30 billion in pension obligations that the company has. It does not affect any employees who retired since 2010 or current employees. The former management employees are not covered by a union.

Lawyers representing the retirees filed a federal lawsuit in Texas trying to block the transaction. The suit says that retirees will lose their federal protections if Prudential takes over.

It is unclear how many Verizon management retirees in the Capital Region would be affected by the Prudential deal. The company has a large office on State Street in downtown Albany.

"This lawsuit is without merit," said Verizon spokesman John Bonomo. "Verizon's actions regarding its pensions protect the interests of our retired management employees. The monthly pension benefits of the retirees receiving an annuity from Prudential will remain unchanged."

A spokesman for the federal Pension Benefit Guaranty Corp. said he was aware of the issue, but he didn't immediately know if the agency would be commenting on the transaction, which the lawyers for the retirees said was unprecedented. The PBGC ensures that retirees are paid after a company terminates their pension plan, or when the pension does not have enough money to continue to make payments. Companies like Verizon pay into the system to fund the program.

The deal, which is expected to close Monday, will also save Verizon $1.7 million in annual payments to the PBGC.

"The transaction is expected to further Verizon's objective of de-risking the pension plan while improving the company's longer term financial profile," the company said on Oct. 17 when it disclosed the Prudential transaction.